Trust but verify before responding to an IRS letter
The end of the year is a busy time for most Americans. Along with planning for the holidays and the new year, some taxpayers can expect to receive a letter from the IRS.
The IRS sends out more notices in November and December than at any other time of the year – causing anxiety for many taxpayers.
And, if the trend continues, this December will see even more letters arriving in mailboxes. In fact, in 2015, the IRS sent six times more notices than it did in 2001.
There are many reasons why the IRS may send a letter or a notice to an unwitting taxpayer. Per the IRS, here are some potential causes:
- The individual owes taxes.
- The IRS changed the refund amount.
- The IRS charged a penalty.
- The IRS changed the tax return.
- The IRS has a question about the tax return.
- The IRS must verify the individual’s identity.
- The IRS needs more information.
- There’s a delay in processing the return.
In some cases, taxpayers or their tax professionals can easily resolve the issue with a phone call to the IRS. But in other cases, the issue can be much more complicated and requires time to address.
What to do when an IRS letter arrives in the mail
Remember these tips:
- Don’t panic.
- Don’t ignore the letter.
- Verify that the IRS is correct before responding or paying.
- Talk to a tax advisor.
A good rule of thumb: Adopt the Russian proverb, “Trust, but verify.” In other words, trust the source, but confirm the accuracy of the information before taking action, such as sending a check to the IRS.
“The reality is that the IRS is not immune from making mistakes. They rely on the accuracy of the information they receive or have on hand,” said Tom Yearsley, with H&R Block’s Tax Notice Services. “For this reason, don’t simply pay if the letter says you owe. It’s always a good idea to get a better understanding of what the letter means, what the IRS is looking for, and what your best options are before taking action. That’s where your tax advisor comes in.”
How tax professionals can help
IRS notices and tax problems can be complicated. Taxpayers often get peace of mind from seeing a tax professional who has knowledge and training on tax laws, tax problem-solving options, and how to apply those rules to each situation. Tax pros also know how to effectively work with the IRS and state taxing authorities.
H&R Block’s Tax Notice Services helps taxpayers resolve tax notices, audits and other tax problems. The service offers a free consultation on each taxpayer’s situation and affordable flat fees, depending on each client’s specific issues. For more information on H&R Block’s Tax Notice Services, or to get help with a letter from the IRS, call 1-800-HRBLOCK (1-800-472-5625).
By Tom Schad
Vivian Greene once said “Life isn't about waiting for the storm to pass...It's about learning to dance in the rain.”
This is Tom Schad’s philosophy when it comes to understanding the role of taxes in American life. Tax laws may change but they are not going away, so one might as well learn to ‘dance’ with them through greater understanding of the laws and of the many products and serves available to the average taxpayer to help protect them.
Schad graduated from the University of Kansas’ William Allen White School of Journalism and Mass Communications where he earned a bachelor's degree in journalism with majors in public relations and magazine. He came to H&R Block in 2003 and has served in many communications roles throughout his career at the company.